EUR/USD Weekly Outlook: Geopolitics, Fed Minutes, and PMI Data

The EUR/USD outlook for the coming week depends heavily on the stability of the current Middle East ceasefire. Any escalation in military activity regarding Iran is likely to trigger a risk-off sentiment, strengthening the US dollar regardless of incoming macroeconomic data. Conversely, should geopolitical tensions remain contained, market participants will pivot their focus toward scheduled economic reports.

Monday and Tuesday: Chinese and US Indicators

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Monday features crucial economic data from China, including fixed asset investment and industrial production. Markets expect moderate growth in both metrics, which could provide indirect support to the euro via improved risk appetite. On Tuesday, attention shifts to the US housing market with the pending home sales report, where a forecasted 1.2% increase could bolster the dollar. Simultaneously, the Eurozone will release its trade balance for March, with analysts anticipating a narrowing surplus to €6.5 billion.

Wednesday: Eurozone Inflation and FOMC Minutes

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Wednesday's session is headlined by the release of the final Eurozone CPI for April. Forecasts suggest stable core inflation at 2.2% and headline inflation at 3.0%, with market volatility only expected in the event of significant data revisions. The American session will feature the FOMC minutes from the April meeting, which will be scrutinized for insights into the central bank's stance on interest rates and inflation risks.

Thursday and Friday: PMI Data and IFO Indices

Thursday, termed "PMI Day," will provide key sentiment data for Germany, the Eurozone, and the US. While manufacturing PMIs are expected to remain in the expansion zone, services indices are projected to remain below the 50-point threshold, signaling ongoing sectoral challenges. Additionally, the US unemployment claims report will be monitored for any deviations from the current stable range of 190,000 to 210,000.

The week concludes on Friday with Germany's IFO indices, which are expected to show a decline in business climate and expectations. This would indicate continued pressure on the Eurozone's real economy. Overall, while macroeconomic data will dictate short-term volatility, the broader market remains sensitive to geopolitical developments that favor safe-haven flows.

Technical Analysis

From a technical perspective, the EUR/USD pair maintains a bearish bias. On the H4 timeframe, the price remains positioned below key Ichimoku lines, confirming a downtrend. Immediate downward pressure targets the 1.1610 level, while further bearish movement could see the pair test the 1.1570 support zone.

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